Rules Change for Excise Tax Returns

Oct 2nd 2001

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The IRS has issued final regulations on the requirements for excise tax returns, payments, and deposits. These regulations are effective for calendar quarters beginning after September 30, 2001 and they relate to taxpayers who file Form 720, Quarterly Federal Excise Tax Return. The changes will be reflected on the fourth quarter Form 720 and its instructions.

Filing dates. All Forms 720 are to be filed by the last day of the month following the quarter for which the return is made. The returns are due by April 30, July 31, October 31, and January 31. The one-month filing extension that was allowed for returns relating to communications, air transportation, and ozone-depleting chemicals has been eliminated.

New Deposit Threshold. No deposit is required for taxes listed in Part I of Form 720 if the net tax liability does not exceed $2,500 for the quarter. The previous threshold was $2,000.

Change in Deposit Dates. The classes of tax referred to as the 9-day rule, the 14-day rule, and the 30-day rule have been eliminated, and all semimonthly deposits of tax made under the regular method of deposits are due by the 14th day of the following semimonthly period. Typically these dates will be the 29th day of the month for the first semimonthly period and the 14th day of the following month for the second semimonthly period. If the deposit due date falls on a Saturday, Sunday, or legal holiday, the deposit is due the immediately preceding business day.

There are no changes to deposit dates under the alternative method of making deposits.

Amount to Deposit and Safe Harbor Rules. The semimonthly deposit of tax is required to be at least 95% of the amount of net tax liability due. This replaces the requirement to deposit 100% of the net tax liability and the current liability safe harbor rule. The look-back quarter liability safe harbor rule still applies.